Joe Leahy – Financial Times, 06/08/2015
South America’s largest economy faces a difficult balancing act to avoid a potentially disastrous spiral of economic contraction as it seeks to control inflation.
Brazil’s planning minister Nelson Barbosa warned that he expected only a very gradual recovery from this year’s recession, in contrast with previous downturns during the past decade when the country immediately bounced back with rapid growth.
However, Mr Barbosa added that growth should still be enough for Brazil to avoid slipping into a situation in which interest rate increases to control inflation combined with an austerity programme to reduce the budget deficit only deepened the recession.
Luciana Magalhaes and Will Connors – The Wall Street Journal, 5/11/2015
CURITIBA, Brazil—A convicted money launderer at the heart of an investigation into an alleged corruption scheme at Brazil’s state-run oil company Petroleo Brasileiro SA alleged President Dilma Rousseff and former President Luiz Inácio Lula da Silva knew about the alleged scheme.
Alberto Youssef, a currency dealer who was convicted of money laundering and sentenced last month to three years in prison, made the allegations to a congressional commission investigating the alleged corruption at Petrobras. Mr. Youssef had previously made the allegations to investigators as part of a plea deal for a lesser sentence.
When asked by lawmakers Monday if Ms. Rousseff and Mr. Lula da Silva, along with other top government officials, knew of the alleged scheme, Mr. Youssef said, “It is my understanding that [they] knew everything.”
Paulo Sotero – Financial Times, 5/12/2015
The severity of the crisis that has engulfed Brazil in the early part of President Dilma Rousseff’s second term has generated an unusual degree of candour among officials and politicians.
“State capitalism does not work well in a democracy,” said finance minister Joaquim Levy after the gigantic March 15 street protests that revealed the extent of popular anger caused by the nation’s reversal of fortunes, and turned Ms Rousseff into a highly unpopular and isolated leader less than six months after her re-election.
Mr Levy was referring to the part of the crisis he is in charge of fixing: the debilitating effects of large-scale state intervention in the economy during Ms Rousseff’s first term. It turned fiscal surpluses into deficits, brought inflation back, compromised investors’ confidence and threw the nation into a recession expected to last for a while. Mr Levy’s task is probably the easier one.
Michael Smith, Sabrina Valle, Blake Schmidt – BloombergBusiness, 05/08/2015
In mid-2013, Brazilian federal police investigator Erika Mialik Marena noticed something strange.
Alberto Youssef, suspected of running an illicit black-market bank for the rich, had paid 250,000 reais (about $125,000 at the time) for a Land Rover. The black Evoque SUV ended up as a gift for Paulo Roberto Costa, formerly a division manager at Brazil’s national oil company, Petrobras. “We were investigating a money-laundering case, and Petrobras wasn’t our target at all,” says Marena. “Paulo was just another client of his. So we started to ask, ‘Why is he getting an expensive car from a money launderer? Who is that guy?’”
Marena had spent the previous decade building cases against money launderers, and Youssef had been a perennial target. He’d been arrested at least nine times for using private jets, armored cars, clandestine pickups by bagmen, and a web of front companies to move illicit cash. But Youssef had been spared serious jail time by testifying repeatedly against other doleiros, Brazilian slang for specialists in laundering unreported cash.
Paul Kiernan – The Wall Street Journal, 4/22/2015
Brazil’s state oil company Petróleo Brasileiro SA put a price tag on a corruption scandal that has thrown the country into political and economic turmoil, writing off $17 billion due to losses from graft and overvalued assets.
The disclosures were part of the first audited financial statements released by Petrobras in more than eight months.
Brazilian federal prosecutors since last year have been investigating allegations that the company’s suppliers conspired to overcharge Petrobras for major projects, funneling some of the illicit profit to former Petrobras executives and politicians in the form of bribes and illegal political donations.
Mary Anastasia O’Grady – The Wall Street Journal, 04/15/2015
Former Brazilian presidential candidate Aécio Neves speaks for a lot of his compatriots when he says President Dilma Rousseff’s Workers’ Party (PT) used stolen funds to defeat him in Brazil’s runoff presidential election in October.
In an interview in Lima last month I asked Mr. Neves—who is president of the Social Democracy Party of Brazil (PSDB)—whether he lost the election because the socialism of the hard-left Ms. Rousseff had greater appeal to Brazilians than his more market-oriented platform.
He denied the possibility. He lost, he told me, because of “organized crime.”
Otavio Frias Filho – Financial Times, 4/5/2015
To watch the political theatre now unfolding in Brazil is to behold a country licked by discontent and scandal. An economy that had already been drifting for years is now in recession, and inflation is on the rise. Dilma Rousseff, narrowly re-elected to the presidency late last year, has had little choice but to renege on campaign promises and resort to harsh austerity.
While spending cuts are a necessary corrective to the fiscal complacency of her first term, many accuse Ms Rousseff of deception. They are embittered, too, by allegations of multibillion dollar kickbacks connected to Petrobras. No evidence has emerged to implicate Ms Rousseff, who as minister of mines and energy headed the Brazilian state-owned oil company’s board of directors when much of the corruption is said to have occurred. Still, large crowds of protesters gathered across the country last month, calling for her to be impeached.
Brazil is one of the few democracies to have removed a sitting president before (Fernando Collor was turfed out of office in 1992). Lawmakers may be tempted to unsheathe their daggers once again. As recently as December, fewer than a quarter of Brazilians disapproved of Ms Rousseff’s administration. Now the figure is over half.